April 2022 Newsletter
News & Commentaries by Ron Robins
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Latest Podcasts:
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Latest Podcast: Great Cleantech Stocks and Faith-Based Funds Articles covered: “3 Cleantech Stocks to Buy for a Greener Portfolio” and “Sunrun: 3 Trades For Investors Seeking Solar Energy Exposure” both by Tezcan Gecgil; “Religious investors who want to buy into companies that uphold their beliefs have these options” by Russ Wiles; and links to nine other articles.
— By Ron Robins
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AllianceBernstein: Understanding Your Bond Portfolio’s Carbon Footprint. “Transitioning to a net-zero carbon economy* is vitally important, and corporate bonds will play a critical role in the transition. To support that journey, sustainable investors should monitor the carbon impact of the corporate bonds in their portfolios. But there’s a lot more to understanding a bond portfolio’s carbon footprint than conventional metrics can show.”
[COMMENTARY]Few investors know how the carbon footprint of a bond is computed. This article provides a good understanding of the issues involved.
AllianceBernstein: Understanding Your Bond Portfolio’s Carbon Footprint, by AllianceBernstein, April 22, 2022, 3BLCSRWire, USA.
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A Deconstruction of the Short-Termism Thesis. “The only reasonable conclusion from reading [this book] it is that short-termism is like the proverbial emperor with no clothes. It may be emotionally satisfying, but there is very little, if any, empirical evidence to support its main theses.
It is, in other words, a theory in search of non-existing empirical support. It is more of a myth than a reality, and it should have no weight in policy decisions about the make-up of the modern corporation, its governance and its role in society, let alone in laws, regulations and court decisions impacting contests for corporate board seats and corporate control.”
[COMMENTARY]For many of us short-termism in the financial markets is one of the deadly sins of the modern era. It’s said to detract from long-term planning and action that would truly benefit business profits and society’s living standards. This article reviews a new book by Professor Mark J. Roe entitled “Missing the Target: Why Stock Market Short-Termism Is Not the Problem.” In the article, Charles Nathan reviews Professor Roe’s book in which the professor destroys our notions of short-termism!
A Deconstruction of the Short-Termism Thesis, a book review by Charles Nathan, April 15, 2022, Harvard Law School Forum on Corporate Governance, USA.
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Moving to Clean Energy–Will It Take a War? “Despite the urgency coming from Russia’s invasion of Ukraine, a transition from fossil fuels to clean energy cannot happen without first having acceptable alternatives, says Richard Ottinger, dean emeritus of Elizabeth Haub School of Law at Pace University. Solar and wind installations must be built first, and transmission lines. No country would accept the economic disruption of premature action on abandoning fossil fuels, he says.”
[COMMENTARY]To plan and build for a clean energy future wherein we’re able to stay within that 1.5-degree threshold, requires the kind of expenditures that governments — and their taxpayers — globally will not willingly make. However, should the Russian-Ukrainian war persist, that could change as fossil-fuel energy prices remain highly elevated.
Furthermore, I believe the public needs to accept very, very high fossil-fuel energy prices as the price to pay for a low carbon future.
Moving to Clean Energy–Will It Take a War? By Richard Ottinger, April 15, 2022, Bloomberg Law, USA.
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It’s Been a Rough Start to 2022 for Sustainable Investing Stock Strategies. “As energy stocks surged and tech tumbled, sustainable portfolios had a tough quarter.”
[COMMENTARY]I argue that most ESG funds are too concentrated in tech and financials. Though most of their investors desire a zero-carbon world, there’s no way we get there without massive new mineral (copper, silver, lithium, cobalt, etc.) — read mining — development. Many mining ventures are seriously engaging ESG in their operations and so could be incorporated into numerous ESG funds. Of course, getting ESG investors interested in mining is the holdup!
It’s Been a Rough Start to 2022 for Sustainable Investing Stock Strategies, by Lauren Solberg, April 13, 2022, Morningstar, USA.
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ESG — A Mystery and a Shock Poll. “Climate-related financial risks are getting growing attention — but a new survey from BCG casts doubt on how seriously institutional investors are taking them. Just one in 20 investors polled by the consulting firm said that climate and ESG-related issues were among the three risks they took most seriously. And only 11 per cent of the 150 investors polled indicated that ESG is a primary consideration in day-to-day investment decisions.”
[COMMENTARY]BCG is a reputable firm, so to have results like this in one of their surveys is surprising. This poll certainly seems an outlier. Has the Russia-Ukraine war changed things?
ESG — A Mystery and a Shock Poll, by Andrew Stuttaford, April 10, 2022, National Review, Capital Matters, UK.
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Why investors may need to pivot from ESG towards carbon-intensive industries. “Investors have been keen to show their green credentials by shunning carbon-intensive industries. The cost of that virtue signalling is now becoming apparent.”
[COMMENTARY]Most ethical and sustainable investors shun investing in companies producing lots of carbon in their operations. My thinking is twofold. Firstly, it’s a moral issue if we choose to make fossil fuels ‘scarce’ thereby increasing the prices of everything, including food. Then, should governments subsidize food prices and fossil fuel purchases for the poor? (Look what’s happening in many countries like Sri Lanka with its food and energy riots?)
Secondly, there’s no way we can bring about a clean energy future without massive increases — and numerous new mines — in the production of copper, lithium, cobalt, silver, etc.
Hence, this author makes an interesting point. Incidentally, many major oil companies are moving into renewables, and mining companies are getting serious about ESG!
Why investors may need to pivot from ESG towards carbon-intensive industries, by Frederic Guirinec, April 1, 2022, Money Week, UK.
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An Inconvenient Truth About ESG Investing. “None of the high sustainability funds outperformed any of the lowest rated funds… companies in the ESG portfolios had worse compliance record for both labor and environmental rules.”
[COMMENTARY]Though this writer got published in a highly prestigious journal, it seems he was quite selective in his choice of papers to include in this article. To me, this article speaks more about greenwashing among green funds than about their performance.
An Inconvenient Truth About ESG Investing, by Sanjai Bhagat, March 31, 2022, Harvard Business Review, USA.
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The Social Purpose Transition Pathway. “The purpose of this project is to assess the degree to which companies with a stated social purpose are governing, implementing, and disclosing progress on their purpose. This is the first Social Purpose Rating in the world focused on implementation…
Out of an initial sample of 197 businesses with headquarters or significant operations in Canada, only 34 met the gateway criteria of having a stated purpose that creates value for society, rather than solely for shareholders or customers, putting them ahead of most of their peers and competitors regardless of their placement in this rating exercise.”
[COMMENTARY]Corporate Knights et al, have created a terrific new way of determining the value of ‘S’ in ESG, in Canadian companies. There’s a listing of companies that all ethical and sustainable investors will want to review.
The Social Purpose Transition Pathway, by Corporate Knights et al, March 2022, Canada.
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Featured Book
Your Essential Guide to Sustainable Investing: How to live your values and achieve your financial goals with ESG, SRI, and Impact Investing, by Larry E. Swedroe and Samuel C. Adams, Harriman House 2022.
“How can you find investments that truly reflect your principles? This excellent book will tell you. You’ll learn the nuances of social investing as well as discover your likely investment returns. Highly recommended!” –Jane Bryant Quinn, Author, How to Make Your Money Last: The Indispensable Retirement Guide.
